| Buying a few different stocks to sell covered calls on | | | | stocks are better. |
| can be a good thing or a bad thing. All basic principles | | | | 3. Stocks trending up or sideways |
| of buying stocks still apply, so choose your positions | | | | The last thing I would want to do is to buy a stock |
| carefully. | | | | that is falling with the intension to sell calls on it. If a |
| So what stocks are good candidates for covered | | | | stock is going down it will most likely keep going |
| calls? | | | | down, why would you buy something like that. There |
| 1. Good long Term Plays | | | | is no use selling a $1 call on a stock if it goes down |
| If you are going to sell covered calls it is important | | | | $5. |
| that you do it on stocks that you would not mind | | | | Any stock that I buy with the intension of doing a |
| holding for a longer term time frame, because you | | | | covered call I like to see it either starting to trend |
| might have to. These stocks should have good | | | | higher or at least trending sideways. |
| fundamentals and be companies that will last. | | | | 4. It Should have options |
| 2. Cheap Stocks | | | | This goes without saying, but if you are going to sell |
| Cheaper stocks can have a higher possible return | | | | a call on a stock it needs to be optionable. Not |
| when it comes to covered calls. If you sell a $2 call | | | | allstocks have options. If a stock does not have a lot |
| on a $50 stock it is only 4%. If you sell a $2 call on a | | | | of volume, it might not have options on it. There are |
| $10 stock it is a 20% return. Just remember this isn't | | | | a few other reasons a stock might not have options |
| the most important thing to look at. High quality | | | | so it is worth it to look into that. |